The US$67 billion stock-swap deal between AT&T and BellSouth, announced Sunday, would give the combined entity control of four of the seven regional Bell companies that were created after the 1984 breakup of the original AT&T Corp.
Some of the IT executives said the possibility that pricing for telecom services could increase because of diminished competition is a concern.
"There's a possibility that it will go back into a state like it was in the past, before deregulation," said John Fisher, a 2006 Premier 100 honoree. Fisher, who in late January started a consulting firm called Rethinking IT Inc. after spending 10 years as CIO at SmithBucklin Corp. in Chicago, added that vendors may try to take a different approach with users "if they're the only game in town."
Fisher also voiced concerns about possible disruptions in service delivery because of internal issues at AT&T and BellSouth as the planned merger proceeds. He said SmithBucklin experienced such disruptions after SBC Communications Inc.'s 1998 acquisition of Ameritech Corp., which was the trade association and IT user group management firm's local telecom service provider. SBC bought the remnants of AT&T Corp. last year and renamed itself AT&T Inc.
When SBC took over Ameritech, "there was turmoil in the staff, and they couldn't answer questions as quickly as they did before," Fisher said. "What you find in mergers like this is that people become distracted and aren't able to do their jobs as well for the customer. It's the water-cooler effect."
On the pricing front, though, Fisher and other Premier 100 attendees said the availability of new technologies such voice over IP (VOIP) and potential competition from companies such as Vonage Inc. and Skype Technologies SA could make it harder for AT&T to take advantage of its expanded market position if the BellSouth deal goes through.
The acquisition could limit traditional telecom options for corporate users, said Rebecca Blalock, CIO at Southern Co., an electric utility in Atlanta. But vendors like AT&T "are living in a world where they aren't the only technology out there," she added. "That's why I'm not as concerned as I might be if there weren't other technologies available."
Blalock, who also is a 2006 Premier 100 honoree, said Southern Co. is "moving fast" to start up some VOIP pilot projects. She noted, though, that the utility is a big customer of both AT&T and BellSouth and has received solid service from the two vendors in the past. Blalock's AT&T account representative sent a message to her BlackBerry device early Tuesday morning to notify her of the deal and followed up with another message assuring her that AT&T would continue an ongoing disaster recovery initiative between Southern Co. and BellSouth.
"It's certainly going to be easier for me to deal with one entity than it is to deal with two," Blalock said -- a sentiment echoed by other Premier 100 attendees.
Dan Buchanan, manager of IT at Parker Hannifin Corp.'s O-Seal division in San Diego, said Parker Hannifin as a whole has been moving toward consolidating its telecom services with what is now AT&T. In addition to giving the company a single point of contact for its telecom needs, that strategy is designed to help Parker Hannifin negotiate better pricing by grouping together all of its telecom spending, Buchanan said.
"We're dealing with such a large portfolio of services that we can't easily migrate to another supplier, and they know that," he said. "But they still come to the table and negotiate with us based on the total dollar spend."
Don Gibson, vice president of e-commerce and infrastructure at FedEx Corp.'s FedEx Kinko's Office and Print Services Inc. unit in Dallas, said that he worked for AT&T Corp. in the 1980s, "and it's like it's coming full circle." But Gibson, another 2006 Premier 100 honoree, predicted that for corporate users, dealing with the new AT&T in the future "is going to be like it is today, or potentially better."
AT&T will be watched "very closely" on pricing over the next year or two if the BellSouth acquisition is approved, making it harder for the company to try to gouge users, Gibson said. "And hopefully, by having consolidated [operations], their costs will be lower," he said.